COMMITTEE OF THE WHOLE

The Chair of the GEF, Mohamed T. El-Ashry, opened Tuesdays
Committee of the Whole with an address emphasizing the urgency of
a decision from the COP on the GEFs role as the institutional
structure for the financial mechanism. Delegates responded with
repeated questions about the balance of decision-making authority
between the GEF and the COP on financial matters. Several
delegations expressed concern over whether the COPs authority
and priorities would be carried out by the GEF, and how the two
institutions scientific advisory bodies would interact. El-Ashry
said the GEF is ready and waiting to serve as the permanent
financial mechanism for the Convention. He said a significant
portion of the $2 billion pledged to the new GEF was intended to
finance activities under the Biodiversity Convention. He said
that the GEF Council had approved a two-track programme of work
to develop a strategy for funding work related to biodiversity.
The first track is for an overarching strategy by July 1995, and
the second is to follow interim 1995 guidelines approved by the
Council in early November. The guidelines provide resources for
enabling activities, preferential projects, and ozone phase-out
in countries not eligible for funds under the Montreal Protocol.
El-Ashry cautioned, however, that the GEF would not be able to
allocate financial resources to biodiversity at its January
meeting unless it receives guidance from the COP on policies,
strategies, programme priorities and eligibility criteria for
activities to be funded under the Convention. He said that the
GEF Implementing Agencies have been instructed to designate an
$80 million programme of work for consideration by the Council in
January. El-Ashry said that the restructured GEF is striving
toward universal participation and democratic governance. Since
the restructuring, 138 countries have joined the GEF. In support
of the GEFs candidacy as the financial mechanism, El-Ashry also
mentioned the collaborative relationship between the GEF and
Secretariats of the related conventions, and the extensive
negotiations of ICCBD-2 to designate the GEF as the interim
financial mechanism. He also noted that the $315 million that was
allocated to 57 biodiversity projects during the GEF pilot phase
is a solid foundation for continued work under the Convention.
Following El-Ashrys speech, Austria, Brazil, Uganda, Cameroon,
Malaysia and Malawi questioned whether the authority and
priorities of the COP would be reflected in financial allocations
by the GEF. Brazil said that the determination of resources would
be made jointly by the GEF and the Convention Secretariat, but
asked how the GEF would respond to the COPs decision on the need
for funding. Malaysia and Malawi asked if the GEF was prepared
to accept the authority and supremacy of the COP under Article 21
of the Convention. Cameroon asked whether other implementing
agencies priorities might interfere with those of the COP and
the GEF. El-Ashry responded that it was the COPs responsibility
to provide programme priorities, strategy and other policy
guidance. He said that the GEF would translate the guidance into
its funding and operations, and that the GEF Council would have
final approval of projects. Mauritania said it represents 9 of
the poorer GEF members as a GEF Council member, and that the GEF
is accountable to decisions of the COP regarding the Convention.
Chile, Brazil and Kenya requested clarification on the
relationship between the GEF Science and Technical Advisory Panel
(STAP) and the SBSTTA. Chile asked how work would be divided
between the two scientific bodies. Brazil asked whether the STAP
would scrutinize the SBSTTA and said it did not believe SBSTTAs
recommendations should be reviewed by the STAP. Kenya said that
SBSTTAs decisions should not be reviewed by the STAP. El-Ashry
said the role of the STAP within the GEF had changed since the
pilot phase, when it reviewed all projects. He said the STAP
would be smaller and more strategic in the GEF activities, and
that the GEF had no intention for the STAP to duplicate the
SBSTTAs work. Chile and Mauritius questioned El-Ashry on the
need for funds beyond the resources provided by the GEF.
Mauritius asked whether the need for additional funds meant that
the COP would have to establish an additional financial
mechanism. Chile asked how the GEF would determine what
percentage of its resources would be applied to biodiversity, and
whether particular funds would be allocated for countries with
economies in transition. El-Ashry said there would be no
earmarking for regional groups or countries with economies in
transition. He said the need for additional funds could be
addressed by using GEF funding to leverage contributions from
other donors and the private sector. Slovakia, speaking on
behalf of Albania, Armenia, Belarus, the Czech Republic, Estonia,
Hungary, Kazakhstan, the Slovak Republic and Romania, fully
supported the GEF as the financial mechanism. She said the GEF
should be recognized as the permanent financial mechanism. El-
Ashry said that while the GEF was prepared to serve as the
permanent mechanism, the Convention permitted the COP to choose a
different mechanism in the future if it was not satisfied with
the GEF. He said that a permanent designation was preferable,
noting that it would send a signal of certainty. Since many
delegations did not have the document UNEP/CBD/COP/1/6/Add.1 in
the morning it was agreed that the Committee would consider this
issue in the afternoon. Algeria, on behalf of G-77 and China said
that given the late distribution of the document more time was
needed for consultation. He said the earlier discussions on the
GEF were useful and noted the particular importance of Article
20, especially the issue of new and additional financial
resources for developing countries. He said the financial
mechanism in every case should operate in a system of governance
that is democratic and transparent and which is accountable to
the COP. He asked the Committee for the use of the Conference
room in the late afternoon so that the G-77 could consult
further. An NGO statement was presented on behalf of a number of
NGOs. Jesper Grolin of Greenpeace Denmark, said that under
Article 21, the financial mechanism must function under the
authority and guidance of, and be accountable to, the COP. He
noted that the GEF Instrument only mentions guidance and
accountability and hence there is clearly some incompatibility on
the issue of authority. He also noted that paragraph 3 of the
draft Memorandum of Understanding (MOU) states that the decisions
of the COP shall guide the institutional structure in the
operation of the financial mechanism. In paragraph 5, the COP can
only ask the institutional structure to reconsider any funding
decision but cannot truly exert authority over the institutional
structure. He suggested that there were three options before the
COP: amendment of the GEF; amendment of Article 21; and
establishment of an independent funding mechanism. Germany, on
behalf of the EU, stated that the concerns of many governments
had been alleviated by the newly restructured GEF, which is now
transparent, democratic and consistent with Article 21. He noted
that all country parties to the Convention are now represented in
the GEF. He said that the MOU is clear and helpful except for
paragraph 5.2. A quick decision on the financial mechanism was
requested. Australia supported the GEF as the appropriate
permanent institution, especially given the possibility of review
not less than two years after the Convention has entered into
force and the fact that the GEF is now fully operational with
funding for the next three years. Australia and other donors have
committed to new and additional resource replenishment on the
basis that the GEF would be the permanent institution. She also
supported the survey of other financial institutions as reflected
in paragraph 11 of the Secretariat document. Slovakia, on behalf
of the Eastern European Group, indicated support for the EU and
Australia and called for the GEF to be designated as the
permanent institution. The US fully supported the EU and
Australia regarding the GEF as the institutional structure for
the financial mechanism. He noted that the restructuring has
ensured more transparency, new and additional resources, and
predictability, not to mention the fact that the use of GEF
resources are expected to be in conformity with the criteria
established by the COP. Austria noted that the GEF will use its
replenished funds (for the next three years at least) regardless
of whether the COP decides to use it as the financial mechanism.
He urged that efforts be directed towards defining the programme
priorities. He also noted the efforts of the GEF to draw on
additional funds from outside the GEF, such as the World Bank and
other regional banks. Norway cited several reasons for supporting
the newly-structured GEF as the institutional structure for the
financial mechanism: if the COP is to implement the Convention
quickly, this crucial part of the process must be clarified; the
GEF stands a better chance at resource mobilization from other
sources; and all the different players can be activated more
expediently if this decision is settled sooner rather than later.
Finland also supported the EU and said that this COP should take
a first step forward in implementing the Convention and that the
selection of the GEF would be a move in the right direction.
Japan also supported the GEF as the permanent financial
institution, but urged against any hasty decisions in this
regard, calling for more detailed discussions. New Zealand
supported Australia, the EU and Norway and reminded delegates of
its original reservations about the GEF during the pilot phase.
However, New Zealand fully supported adoption of the restructured
GEF as the institutional structure noting its full accordance
with Article 21 of the Convention. He noted the role of the GEF
in ensuring the effective functioning of the Convention. On the
question of arrangements of the financial mechanism, he welcomed
the Secretariats MOU as a good basis for future discussions.
Sweden highlighted the fact that the longer uncertainty lingers
about use of the GEF, the harder it will be to build broad-based
support to mobilizing funds for any further replenishment of the
GEF. He noted the lengthy and difficult process of restructuring,
as well as the replenishment of the GEFs $ 2 billion budget.
Further replenishment will be difficult as long as the GEFs
future vis-�-vis the Convention remains uncertain. He noted that
attempts to develop alternatives to the GEF are not viable.